Analysts on China’s CPTPP bid, strategic competition with the United States

Chinese President Xi Jinping on January 30, 2015. China has applied to join the CPTPP, an 11-nation trade pact formed in 2018 after the United States withdrew from the Trans-Pacific Partnership.

Fred Dufour | AFP | Getty Images

China will likely fail in its attempt to join the Comprehensive and Progressive Trans-Pacific Partnership – but its decision to submit a candidacy has highlighted the lack of US economic policy in Asia-Pacific, analysts said.

The CPTPP is an 11-nation mega trade pact formed in 2018 after Donald Trump withdrew the United States from the Trans-Pacific Partnership a year earlier.

President Barack Obama negotiated the TPP to deepen US economic engagement in Asia-Pacific and counter China’s growing influence in the region.

All 11 CPTPP signatories must accept China’s membership application before they can be admitted as a member. The CPTPP countries are: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

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Beijing’s strained diplomatic relations with some member countries would hurt its chances, analysts said. China is also likely to face challenges in meeting the trade pact’s demands for a level playing field in many aspects of the economy, they added.

China is not the only one to have applied to join the CPTPP; the UK and Taiwan have done the same.

United States allies in the CPTPP

US CPTPP allies such as Australia, Canada and Japan increasingly view China as a “strategic threat,” and they could block China’s bid, analysts at the risk consultancy said Eurasia Group.

“Beijing would need to make major concessions on many issues to rebuild goodwill with them. In the absence of a major change in Chinese policy, the consent of these three countries is questionable,” analysts said.

One of the contenders in the race for the next Japanese prime minister is said to have questioned China’s ability to meet CPTPP standards. Australian Trade Minister Dan Tehan also stressed in a speech on Wednesday that any country wishing to join the trade pact “will have to comply with all the rules and standards”.

Japan has an existing territorial dispute with China in the East China Sea, while Australia has been the target of import tariffs imposed by China.

Meanwhile, Canada and Mexico could stand in the way of China through the United States-Mexico-Canada Agreement or USMCA. The trade deal contains a “poison pill” provision requiring one of the three members to consult with the others if it wishes to enter into a trade deal with a “non-trading country”.

Many analysts have said the clause could have targeted China. The USMCA was negotiated by the Trump administration and replaces the North American Free Trade Agreement or NAFTA.

Meet CPTPP standards

In addition to political obstacles, China can struggle to comply with CPTPP provisions that promote cross-border data flows, labor and environmental protection, as well as restrictions on state-owned companies, analysts said.

Companies from the United States and the European Union is among those who have complained about China’s unfair trade practices, such as subsidizing state-owned enterprises, lack of intellectual property protection and the forced transfer of technology.

Its entry into the trade pact would force China to agree to state-owned enterprise rules and labor and environmental regulations, which would be a major departure from its current position.

“Its entry into the trade pact would force China to agree to rules on state-owned enterprises and labor and environmental regulations, which would be a major change from its current position,” wrote the economists of the consultancy firm Capital Economics in a report.

“It is difficult to see how the pressure for self-sufficiency can match the CPTPP’s demands for a level playing field,” they added.

Other Trade experts said it would not be that difficult for China to meet the demands of the mega trade pact.

This is because the CPTPP is less ambitious than its predecessor TPP and has “many exceptions and large loopholes” that would help China comply with the more difficult provisions, said Stephen Olson, senior researcher at the Hinrich Foundation, a nonprofit focused on trade issues.

“And in cases where the stipulated exceptions are insufficient, China has already demonstrated its immense ability to circumvent, circumvent and otherwise nullify trade rules in other agreements,” said Olsen.

“Intelligent diplomacy”

Regardless of its success, analysts said China’s candidacy for the CPTPP highlighted the country’s growing economic weight in Asia-Pacific, while the United States has largely focused on security concerns in the region.

This is especially true when China’s bid followed the formation of a new security partnership between Australia, the UK and the US, called AUKUS, analysts said.

“This move is smart diplomacy in the wake of the AUKUS security partnership announcement, as it draws diplomatic attention to trade and investment issues in Asia-Pacific, where the United States has done little. progress in countering the economic weight of China, ”Eurasia Group analysts said.

Unfortunately, what is clear is that the United States is reacting again rather than leading and therefore leaving China to determine the course of events in Asia.

Guillaume Reinsch

Center for Strategic and International Studies

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